Current foreign direct investment (#FDI) in russia has stopped since the full-scale invasion began on 24 February. FDI Markets data show that in the first quarter of 2022, new FDI was announced in russia worth only $98.5 million, which is 95.6% less than the same period last year.
📍 According to russia’s central bank, the country’s extracted sector is a leading destination for #foreign #investors with more than $116 billion accumulated FDI. However, international #energy companies were the first to decide to exit the russian market (for example: British Patrol, Shell, Equinor). The #manufacturing sector is the second largest destination for foreign investors, with FDI amounting to $103.8 billion. Prohibition of #imports of critical components, sectoral #sanctions, difficulties with payments, all simultaneously greatly complicating the production activities. That is why, despite restraining measures by the russian government, such as banning the sale of assets, it is impossible to stop the exit process.
📍 According to Refinitiv, the value of cross-border mergers and acquisitions (M&A) announced in russia fell to $121.6 million in the first quarter of 2022, which is 93.2% less than in the same period a year earlier. The number of M&A transactions also decreased by 26%.
📍 According to researchers from Yale University, in the face of growing reputational risks and practical problems, more than 1,000 companies have publicly announced their intention to voluntarily close down in russia. However, the exit process is usually time consuming, even in peacetime. Now the russian government is trying to create barriers by restricting the sale of russian assets, combined with the complex process of finding buyers, a quick exit for international companies is now almost impossible. Therefore, in essence, international companies view russian assets as frozen or illiquid.
⛔ All this indicates that international investment activities in russia have almost stopped, and those international companies that want to get rid of the “russian trail” have been taken hostage by russia. Moreover, increasing international sanctions and trade restrictions are preventing local russian businesses from expanding capacity to counter sanctions, which is why a number of domestic producers have suspended their operations. All this points to the relentless movement of the russian federation towards the deepest and worst crisis in its history.
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